70 W. Va. 591 | W. Va. | 1912
The Broomall Iron & Steel Compan)', a West Virginia corporation, executed a deed of trust upon its property in Barbour count)', West Virginia, to secure a $50,000 bond issue. Bonds amounting to $30,000 were purchased by various individuals, and the remaining $20,000 were deposited by said company as
On the 8th of January, 1906, the promoters of the new company entered into a written contract with the old company and its stockholders, whereby two of its stockholders, Grant O. Broomall and Hart Hatch, were to be protected in respect to a certain secret process for the manufacture of planished steel, which the contract provided should be used by the new company. Broomall and Hatch were also to receive a certain portion of the stock of the new company, and were to be employed by it, for a period of not less than five years, at a stipulated salary per month. This contract was made binding on the new company to be formed.
In two or three years after the new company was formed, it became seriously embarrassed, financially, and ceased to operate its plant, or to carry on business, and failed to pay the interest on the aforesaid bonds; whereupon, by the terms of the trust deed securing them, both principal and interest became payable.
Broomall and Hatch then brought a suit to compel the company to operate its plant, and to carry out the agreement made by its promoters for their benefit. Shortly thereafter, H. C. Monahan, a holder of some of the $30,000 of bonds that had been "sold by the old company, brought another suit, on behálf of himself and "all the other bond holders, alleging the insolvency óf
The principal error assigned, and the only one argued by counsel in their briefs is, that the decree erroneously subordinated the lien of the $25,400 of bonds and their interest, held by said Harris, to the lien of the holders of the remaining portion of the original $50,000 bond issue and the interest thereon. That assignment is well tafeen. It is not alleged in the bill, in either of the suits, that 'the $20,000 of bonds which the old company had used as collateral security for a loan, was fraudulently acquired, or was fraudulently held by said Harris. On the contrary, 'Monahan, who sues on behalf of himself and all other holders of any of said bonds, avers in his bill that the whole of the bond issue of $50,000 was a valid, subsisting obligation, outstanding and unpaid. He made this averment with full knowledge’ of the manner in which the old company had used the bonds. Indeed, it clearly appears from a reading of the bill that, plaintiff brought the suit as much for the benefit
It is proven, and not denied or even controverted, that James C. Harvey, who purchased the bonds from the Commonwealth Trust Company, paid full value for them. He had a right to purchase them. Could he not then, even by gift, confer title upon his indorsee, good against the maker and the guarantor? We know of no rule of law forbidding his doing so. So long as the bonds are not held by the company itself, that guaranteed their payment, or 'by some person for its benefit, having been properly put into circulation, it matters not to the other bondholders who owns them, for they purchased subject to the right of the old company, or its successor, the new company, to dispose of the whole of the issue. It is not even contended in brief of counsel that Harris holds the bonds for the new company. But counsel do intimate that 'he holds them for Adolphus Busch, who is a large stockholder in the 'company, and who is
The decree, entered on the 29th of duly, 1909, in so far as it decreed the debt of J. R. Harris to constitute a distinct lien of the third class, will be corrected by an order entered here, so as to make the $25,400 of bonds and interest decreed to him a lien upon the property conveyed by the deed of trust hereinbe-fore mentioned, second in order of priority along with the liens
Modified and Affirmed.